Will Ethereum Security Tokens Address KYC Trading Security Needs?
In a bid to address the most persistent issues of cryptocurrency on the blockchain, Polymath is seeking to tweak the standard market shareholder structure to make trading watertight.
The Polymath Network Telegram on January 13, 2018, surpassed even the Ripple Telegram channel after hitting a maximum cap of 50,000 subscribers. The company has simple yet bold plans to answer the need to “know your customer” (KYC) in cryptocurrency trading.
A New Structure that is Secure from the Start
The Polymath platform generates an interface between securities and the blockchain. Global concerns over money laundering and other fraudulent activities within the cryptocurrency world persist. Being able to replace “shareholders” with “token holders” is something Polymath is touting as it looks to a new era of STOs (Security Token Offerings).
Simply explained, a person’s identification credentials will qualify them for uptake in an ICO. The protocol takes cryptocurrency addresses and verifies them against individual identities, and issuers can establish who can buy from the outset, giving them hitherto unheard of KYC in the cryptocurrency arena.
It also eliminates the anonymity that fosters fraudulent activity. The ability to predetermine the profile of who can access and trade securities means the protocol will forever remove the cloak of anonymous criminal activity.
Virtual currencies globally continue to grapple with security issues. The Polymath Security Token Offering is set to enable the movement of trillions of hesitant dollars in securities trading onto the blockchain. The group is essentially looking to do for security tokens what Ethereum did for app tokens.
From an investor’s point of view, employing the Polymath ST-20 token eliminates much of the speculation of an ICO and enables traditional capital investment through a smart club structure. Identify yourself, acknowledge a “smart contract” and join the club, simple as that.
This streamlined process will allow the traditional vetting process that brokerage account holders experience to be carried over to the blockchain.
Regulators will now have a route to identify the individual trading in the cryptocurrency arena. As explained in their whitepaper, adopting the Polymath protocol means that those with criminal intent are weeded out on the back of their identifying criteria. Only members who are eligible to buy in are allowed, and without adopting STO, transactional capacity is zero.
A Data Lake of Recognized Faces
Behind security tokens powered by Polymath, sits a vast and continuously updated database of eligible investors. Having gone through a verification process, much like one does to enable an account at a brokerage anywhere in the world, traders are known and identifiable.
Adopting a stance of “whitelisting” people from a pool where everyone starts out blacklisted, the protocol will admit only bona fide “club members” who wish to trade. Further benefits incorporated at the outset are that the protocol is fast and decentralized, which lowers costs significantly.
By employing self-regulating security tokens, Polymath anticipates a new level of watertight trading emerging as a wholesale activity, replacing current structures. “By powering the next generation of securities tokens,” the company says, “[they] aim to be the catalyst that will launch the securities token revolution.”